"Why do so many people choose to work with Wealth E&P, when there are so many apps out there to invest with today?"
June 14, 2021
Welcome to Wealth Enhancement & Preservation’s Market Minute, where we get to update you on everything that happened in the markets this past week. I also want to talk to you about why it is so important to preserve your money with a theory that we call "winning by not losing", and how we can handle that.
First, looking at last week: the markets were very divergent again.
You can see the NASDAQ was in the lead, gaining almost 2%. The S&P was up almost by 0.5%, and the DOW was the laggard, being down almost 0.75%. Overall a very different performance but pretty decent, we just have to make sure to be in the right equities.
Here is why it is so important to avoid losses: when you lose 50% on your portfolio, it doesn't just take 50% to get back to even. You have to double your money, and you have to earn 100% to get back to even. If you lose 20%, you've got to make 25% to get back to even.
It is much more important to avoid losses than it is to maximize gains, especially considering that when the market goes up, you're pretty much going to get market performance.
So, how can we do this? We use a lot of different factors and a lot of different indicators. Here is one example:
This StormGuard Armor pulls 12 different indicators and is very predictive of when to get out of the way of the market.
As you can see, there are a couple of times: this goes all the way back to 1989. In 2000 and 2003 you could see the flat line, and again in 2008-2009. That is when the StormGuard indicator showed to get out of the way and get out of the markets.
Going all the way back to 1989, in the lower right corner you can see the S&P averaged about a 10% performance with a standard deviation of almost 17 overall. Instead, if you just simply use the StormGuard Armor to get out of the way, you average over 13% with a lower standard deviation closer to 10.
So again, it is much more important to avoid losses.
If you have any questions for us about the financial markets, please feel free to reach out or visit www.wealthep.com. Otherwise, stay tuned for our next Market Minute next week!
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